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As Montana Coal Board doles out grants, questions loom about hit from Colstrip closure

Posted at 9:13 AM, Jun 21, 2019
and last updated 2019-06-21 11:13:50-04

BILLINGS- The Montana Coal Board wrapped up its quarterly meeting in Billings Thursday, approving more than $1.3 million to projects in communities impacted by coal development.

On its face, just another boring government meeting, but a closer look shows the Coal Board is where the rubber hits the road when it comes to sharing Montana’s coal tax dollars.

Among the projects up for approval: a new gym floor for Colstrip High School, new water lines for the city of Roundup, and money for a new thrift store in Lame Deer.

Coal board members say they’re worried the looming shutdown of Colstrip’s two oldest units will send an economic shockwave through the state and strangle funding for similar projects.

“Our real concern is the impact on the communities and particularly on the workers and their families,” said Colstrip Mayor John Williams, the board’s chairman of 14 years.

Williams says last week’s announcement that Colstrip Units 1 & 2 will close by the end of this year should make his city and all of Montana take notice.

“It’s a reality check. Of course, we had anticipated that we’d have a couple more years to prepare for that, and so the recent announcement of the closure of 1 & 2 at the end of this year came as a surprise,” he said.

The announcement of this closure came after the owners of the plant’s supplier, the Absaroka Mine, announced they couldn’t come to an agreement to extend their long-time coal sales contract with the plant. That sales contract came under threat after the mine’s owner, Westmoreland Coal, restructured after declaring bankruptcy.

“Now the storm is here. We could see the clouds coming, but now it’s here and we better be ready. It just got real,” said Jim Atchison, head of the Southeast Montana Development Corporation in Colstrip.

Atchison admits the turmoil in the coal industry has created an atmosphere of doubt and uncertainty for local residents, but he remains bullish on the town’s future.

“Homes are selling, but reduced in value, of course. The rental market is full. If you drive into Colstrip today, you will see six construction projects going on. It looks like a flurry of activity,” he said.

The plant’s two newer units, 3 and 4, remain operating, but their owners have targeted 2027 as the end of their useful life and likely closure.

Nevertheless, advocates in Montana have been seeking other solutions, including a failed effort in the 2019 Montana Legislature to shift operating costs to the state and possible federal legislation to keep the plant running as a backup power source for the military for national security.

Colstrip’s cloudy future is also on the radar of the Big Sky Economic Development in Billings.

Director Steve Arveschoug says the impact of losing the two older units at Colstrip hits close to home.

“A business sitting in Billings, that’s been providing supplies and resources and expertise and doing business with the operators of Colstrip Units 1 through 4, now their business model is being impacted as a result of that,” Arveschoug said. “So you’ve got job loss, the associated job loss, the business impacts and then you have the tax base loss.”

To put things in better perspective, Arveschoug has crunched the numbers on what closing Colstrip Units 1 & 2 will mean over the next 15 years.

Over that time period, the region would see a loss of 1500 direct and indirect jobs, according to Arveschoug.

“Two and a half billion of lost income, less jobs, less income turning in the market, buying goods and services, eating at restaurants, not paying taxes any longer,” he said.

Those lost taxes, an estimated $600 million between now and 2034 would all lead to a statewide population loss of as many as 3,500 people, according to Arveschoug.

-Jay Kohn reporting for MTN